Fit and proper criteria must for STP service providers: Sebi

The markets watchdog has added this as the new eligibility criteria for STP centralised hub and STP service providers.

Markets regulator Sebi today said only 'fit and proper' entities are eligible to regulate the services and infrastructure set-up in respect of Straight Through Processing (STP).

The markets watchdog has added this as the new eligibility criteria for STP centralised hub and STP service providers.

Generally, financial firms use the STP initiative to pass information electronically in order to optimise the speed at which they process transactions. This eliminates the need for a hands-on re-entry of data that has already been completed at the source.

In a circular issued today, Sebi has amended the guidelines by inserting a new clause "whether the applicant is a fit and proper person" for STP centralised hub and STP service providers.

Among the existing criteria with respect to STP is that no person would act as an STP centralised hub or a STP service provider unless it obtains approval from the Sebi to provide such service.

For giving approval, Sebi takes into account criteria like whether the applicant is a person or entity with a minimum networth as may be prescribed from time to time along with whether the entity has adequate infrastructure facilities setup in India like office space, equipment and manpower with experience in dealing in securities market and adequate expertise in providing necessary services and software solutions.